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GAO Study Finds that Broadband Data Caps are Causing Customer Confusion and Less Internet Use

WASHINGTON, July 30, 2014 – Internet service providers are adopting more usage-based pricing models and consumers may be using the internet less as a result, according to preliminary results from a Government Accountability Office study. Consumers may also be neglecting benefits of lower-cost models due to confusion over data caps, the report found.

“In the midst of the net neutrality debate, there is a new threat to the free and open Internet and that is usage-based pricing which may include the throttling or slowing down of data speeds, overage fees and the exemption of some online services or applications from data caps,” said Rep. Anna G. Eshoo, D-Calif, in a statement and official comment to the Federal Communications Commission on the findings. “These new business models have left consumers wondering whether they will have to foot the bill and how much more it will be.”

The data revealed that all four of the wireless ISPs studied have usage-based pricing, offering higher data allowance tiers at higher cost, while three of the thirteen wireline ISPs do the same and impose fees on exceeding data caps.

Seventy seven participants across focus groups of various backgrounds participated. Of these, many adapted to usage-based wireless plans by limiting their online activities, including limiting streaming and changing plans. Wireline participants were much more critical of these usage-based plans, citing the importance of the internet, comfort with unlimited access, and multi-person households with multiple devices.

Great confusion was also expressed by participants over how much data they individually required. Sandvine, an ISP research firm, noted that “the median wireless customer in North America uses 102 MB of data a month, suggesting more consumers could benefit from low-data plans.” As it stands, however, many users are buying well in excess of that number.

“What if streaming Netflix or Amazon videos counted against your monthly allotment of data…but services owned or affiliated with your broadband provider did not? Or imagine having your wireless provider slow down your service, even though you’re paying for an unlimited plan,” Eshoo said in reference to Verizon Communication’s recent announcement that it would throttle down LTE speeds for intense unlimited-plan users on busy networks.

The study mentioned that internet usage may see 30 percent annual growth for wireless data and at least 20 percent for wireline between 2013 and 2018.

Michael Weinberg, vice president of Public Knowledge, applauded Eshoo’s findings saying that “these preliminary results suggest that these [data cap] concerns are very real and that they may ripple across the entire internet…many consumers recognize that data caps are likely to be used by ISPs to increase the cost of their internet access…we hope that both the FCC and Congress begin taking steps to limit the negative impact that data caps can have on the internet.”